(Bloomberg) — For much of the year, chip stocks have been powering the market higher. Now, Nvidia Corp.’s earnings have a chance to confirm that the rally has more room to run — or add another brick to investors’ wall of worry.
Most Read from Bloomberg
The leader in artificial intelligence semiconductors reports its results after the market close on Wednesday. Wall Street is expecting the latest in a series of strong prints from chipmakers as Big Tech continues to shower the companies with cash to build out AI infrastructure. So investors will be looking for indications about what the growth outlook is from here.
“Nvidia’s results or guidance and the discussion on the call can give investors more confidence that this AI buildout will last not just a quarter, not just 2026, but into 2027 and 2028 and beyond,” said JoAnne Feeney, a portfolio manager at Advisors Capital Management, which owns Nvidia shares. “That will be reassuring.”
A disappointment, however, could give credence to investors’ fears that the group has gotten overextended. The Philadelphia Stock Exchange Semiconductor Index has soared 60% this year, but it tumbled 6.4% over Friday and Monday as inflation concerns weighed on the stocks. Nvidia shares are up 18% in 2026 and 34% since hitting a recent low in late March, but they’ve lost 6.4% in the last three sessions. They’re still outperforming the technology-heavy Nasdaq 100 Index, which has gained 14% this year.
“Nvidia unfortunately created the expectation that it’s going to beat and raise every quarter, if they don’t, that’s going to be disappointing,” Feeney said.
Despite its relatively underwhelming performance in 2026, Nvidia remains the biggest stock in the market, accounting for almost a fifth of the S&P 500 Index’s 7.4% advance this year. Four other chipmakers — Micron Technology Inc., Broadcom Inc., Advanced Micro Devices Inc. and Intel Corp. — are among the seven largest point contributors to the S&P 500’s rise in 2026, a level of leadership rarely seen from this cyclical industry.
Investors certainly have plenty of reasons for optimism in an economy soaked with AI cash. The four biggest spenders — Amazon.com Inc., Alphabet Inc., Microsoft Corp. and Meta Platforms Inc. — are planning as much as $725 billion in capital expenditures this year and significantly more in 2027.
Chips are a huge part of that spending, and Nvidia retains a commanding share of the market for AI accelerators. The growth is coming so quickly that the stock has started to look cheap. Consensus estimates for Nvidia’s net income in fiscal 2027 — which ends in January — have risen by 13% over the past three months, while the view for revenue has climbed 12%, according to data compiled by Bloomberg. As a result of those increased expectations, the shares now trade at less than 24 times estimated earnings, well below their 10-year average of roughly 36.
“The valuation is secondary to the fundamental growth story, which remains the primary driver, but valuations aren’t at a discomforting level,” said Jeffrey Blazek, co-chief investment officer of multi-asset at Neuberger Berman Group, which has $567 billion in assets under management. Nvidia’s valuation “gives us comfort that we’re not in a bubble relative to its earnings or cash flow.”
This earnings season has seen a number of blowout reports from chipmakers, with Intel, AMD, Texas Instruments Inc., NXP Semiconductors NV and Silicon Motion Technology Corp. all posting double-digit rallies in the wake of their results. So far this season, 93% of chipmakers have topped earnings expectations, with an upside surprise of nearly 25%, compared with a 6.6% upside surprise last quarter, according to data compiled by Bloomberg.
But regardless of what Nvidia reports, it may be difficult for the stock to see a similar pop. First, it’s just much bigger than those companies, meaning it takes far more enthusiasm to really move the needle. And second, it’s facing growing competition from rivals like AMD, while major customers Alphabet and Amazon are finding traction with their own chips.
This helps explain why Nvidia is no longer the top performing stock in the market. That title now belongs to companies that supply memory chips and storage, such as Sandisk Corp., Seagate Technology Holdings Plc and Micron Technology Inc.
“The setup going into this, if you can believe it, it’s less of a sexy or exciting story than some of the other more sexy and exciting stories that are out there,” said Thomas Martin, senior portfolio manager at Globalt Investments. “Yet, it’s a gigantic company.”
Nvidia’s growth outlook, while still strong, is expected to decelerate in the coming years, which could further impede the stock’s momentum. The company is expected to post revenue growth of about 72% in fiscal 2027 and 34% in 2028, with the pace continuing to slow from there.
“The narrative is more about the duration of growth and less about the quarter,” said Neville Javeri, a portfolio manager and head of the Empiric LT Equity team at Allspring Global Investments, which owns Nvidia shares. Javeri added that he will be paying close attention for any details about Blackwell chip sales and future demand for its new Rubin line.
Of course, even a strong report doesn’t guarantee that Nvidia shares will rally. The stock has slipped the day after the company’s last three earnings reports, despite solid results. The options market is expecting a 5.5% move in either direction in the wake of the report. Based on analysts’ average price target, Wall Street sees the stock rising 26% over the next 12 months.
“If Nvidia can provide evidence that their newest chips are seeing really good traction and that the addressable market is larger than people think because it’s longer in duration, that will go a long way towards making investors comfortable in their broad ownership of the companies driving the AI buildout,” Advisors Capital’s Feeney said.
Tech Chart of the Day
Top Tech Stories
Talks between Samsung Electronics Co. and its largest labor union broke down, raising the prospect of a strike that may disrupt global chip supply and hamper an important engine of Korean economic growth.
Meta Platforms Inc. is alerting thousands of employees that they’re being laid off, part of a previously announced restructuring aimed at improving efficiency and reducing costs while investing heavily in artificial intelligence.
As SoftBank Group Corp. began investing billions of dollars in OpenAI last year, some executives asked Masayoshi Son what would happen in the event — however unlikely — that the ChatGPT developer should fail.
SpaceX expects to proceed with its acquisition of artificial intelligence coding startup Cursor 30 days after Elon Musk’s company begins trading publicly, according to people familiar with the matter.
Alphabet Inc.’s Google is redesigning its iconic search box and adding new artificial intelligence coding tools, the latest steps in the company’s multibillion-dollar campaign to expand influence in the age of AI.
Earnings Due Wednesday
Earnings Premarket:
Earnings Postmarket:
Nvidia Corp. (NVDA US)
Intuit Inc. (INTU US)
–With assistance from Subrat Patnaik and David Watkins.
Most Read from Bloomberg Businessweek
©2026 Bloomberg L.P.
